CBO boosts digital banking with new direct debit system

MUSCAT, APRIL 20

The Central Bank of Oman (CBO) has rolled out significant enhancements to its Direct Debit service, marking a strategic milestone in the Sultanate of Oman’s broader push toward digital transformation in the financial sector. The improvements aim to streamline transactions for individuals and businesses alike, reduce reliance on cheques, and enhance the overall efficiency and security of banking operations

The newly improved Direct Debit service enables the full digital processing of mandates—right from issuance and authorisation to execution—through electronic banking channels. This transition from paper-based procedures to an electronic framework allows customers to approve mandates directly through their bank’s digital platforms, minimising the need for manual processing and physical documentation.

The CBO, in collaboration with commercial banks, has already launched a pilot phase for two core systems: the Direct Debit System and the Direct Debit Mandate Management System. These platforms are expected to significantly improve user convenience and operational efficiency while expanding the adoption of automated financial services across the Sultanate of Oman.

A direct debit is a payment instruction that authorises a bank to deduct funds from a customer’s account in favour of a beneficiary, based on pre-agreed terms. With the new enhancements, this process becomes more accessible and reliable for both individuals and corporate entities.

In parallel with these technical upgrades, the Central Bank has also reinforced the legal framework surrounding the Direct Debit service. Under the National Payment Systems Law No. 8/2018, beneficiaries are granted legal protection in the event of a bounced direct debit, similar to the recourse available for dishonored cheques. This framework supports the enforceability of direct debit transactions and safeguards the rights of all parties involved.

Key benefits of the updated system include reduced operational costs, increased transaction speed, and improved accuracy. By cutting down on manual errors and eliminating paper-based documentation, the new platform not only enhances service reliability but also contributes to environmental sustainability.

Several banks have already integrated the electronic Direct Debit mandate service into their offerings, with others expected to follow suit by 2025. The move is part of Oman’s national agenda to modernise its financial infrastructure and encourage the development of a cashless, digitally empowered economy.

By upgrading its Direct Debit system, the Central Bank of Oman not only demonstrates its commitment to improving payment services but also reinforces its role as a key driver of financial innovation and digital adoption in the country. As the banking sector continues to evolve, the successful implementation of these enhancements positions Oman as a forward-looking economy ready to meet the demands of a dynamic, tech-driven global financial landscape.